> For the complete documentation index, see [llms.txt](https://docs.infrastructure.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.infrastructure.finance/usd.infra-vault/liquidity-and-redemptions.md). # Liquidity and Redemptions **TLDR:** * Two ways to exit sUSD.infra: sell on a DEX at market price, or redeem through the Vault at the published exchange rate. * Verified holders can redeem through the protocol. Under normal conditions, redemptions settle immediately from the liquidity sleeve. * A dynamic exit fee starts at 0% and increases as the liquidity sleeve is depleted. Fees are paid into the Vault. ## **Why redemption works this way** The Vault finances real infrastructure, so most of its assets are not instantly liquid. Two things have to be true at once: a participant should be able to exit at the published exchange rate, and exiting should not transfer cost onto the participants who remain. ## **How redemptions work** 1. **Request redemption:** An eligible sUSD.infra holder completes the required verification (KYC) process and submits a redemption request through the protocol. 2. **Immediate settlement:** When the liquidity sleeve is above its minimum floor and the applicable circuit breaker has not been triggered, the Vault converts sUSD.infra into USD.infra at the published exchange rate, settled from the liquidity sleeve. The ability to redeem at exchange rate creates an arbitrage relationship between the secondary-market price and the Vault's published exchange rate. If sUSD.infra trades below exchange rate net of the exit fee, protocol redemption can provide an alternative exit. 3. **Dynamic exit fee:** Protocol redemptions are subject to a dynamic exit fee that starts at 0% and increases as the liquidity sleeve is depleted. The fee is paid into the Vault, not to DAWN and not to any operator. It accrues to the Vault's assets and is reflected in the exchange rate, which means participants who stay are compensated for the liquidity that redeeming participants use. The fee exists because instant redemption without one has a known failure mode: the first participants out take the liquid assets at full exchange rate, and everyone remaining holds a book more illiquid than the one they bought into. Pricing the exit removes that advantage. 4. **Liquidity floor:** The Vault maintains a minimum liquidity floor of 10% of TVL. If processing a redemption would take the liquidity sleeve below that floor, the request enters the redemption queue instead of settling immediately. 5. **Queued redemptions:** The queue is not a gate. Queued requests fill at the exchange rate in effect when they execute, continue accruing Vault performance while queued, and fill in the order received as the sleeve refills from contracted revenue, repayments, and new deposits. These constraints exist because AI infrastructure assets are not instantly liquid. The redemption framework is designed to reduce forced liquidations, preserve fairness across participants, and keep exit mechanics aligned with the underlying cashflows of real infrastructure.
## **Liquidity Management & Queues** The Vault uses a liquidity sleeve to make protocol redemptions available without requiring the immediate liquidation of long-duration infrastructure assets. Redemption behavior depends on how full that sleeve is. * **Normal liquidity — sleeve above floor** * Redemption request → verification check → redemption at published exchange rate → dynamic exit fee applied → immediate USD.infra settlement from the sleeve. * **High redemption demand — circuit breaker threshold reached** * Aggregate redemptions are limited over the 24-hour window. Requests beyond the cap queue until capacity is available. This prevents rapid depletion of the sleeve. * **Below the liquidity floor** * New redemption requests enter the queue rather than settling immediately. Redemption value remains tied to the published exchange rate, the position continues earning Vault performance, and requests fill in order as liquidity becomes available. ### The liquidity hierarchy * **Operating target:** approximately 40 to 50% of TVL held in the liquidity sleeve. * **Dynamic exit fee:** increases as the sleeve is depleted. * **Minimum floor:** 10% of TVL is the hard lower bound below which redemptions queue. * **Circuit breaker:** bounds how fast the sleeve can move between those states. All eligible participants are subject to the same redemption rules, including the same exchange rate, dynamic exit-fee mechanism, liquidity floor, circuit breakers, and queue mechanics. ## **Circuit breakers** The Vault limits the aggregate amount of sUSD.infra that can be redeemed over a 24-hour period during periods of unusually high redemption demand to 10% of TVL per rolling 24 hours. This is designed to prevent a short period of concentrated withdrawals from exhausting the liquidity sleeve and forcing the Vault to liquidate long-duration infrastructure assets. It bounds the rate at which the sleeve can drain, which keeps the exit fee curve and the floor from being crossed in a single session. ## Verification Protocol redemption is available to verified participants. Verification is the redemption door which is required to redeem through the protocol. Participation remains limited to eligible non-U.S. persons and subject to transfer restrictions. ## DEX price support The Vault may maintain a standing ability to purchase sUSD.infra on supported DEXs when its market price falls below the published exchange rate after accounting for the applicable exit fee. Purchased sUSD.infra may be retired from circulation. Because these units would be acquired below exchange rate, retiring them reduces outstanding supply and increases the proportional claim represented by each remaining sUSD.infra. The mechanism is intended to provide additional support for secondary-market pricing around the published exchange rate. It does not guarantee any particular market price or trading range.